Preparing Your Agency for the Next Generation

Fran Majidi April 11, 2023
next generation insurance leads

You may be thinking about retirement or you have children and are thinking about passing on the insurance business to them. Most small business owners are so busy running their companies that they don’t consider succession planning. Planning for your inevitable departure as the head of your business is crucial, however. Not only will the next generation suffer if you don’t have a plan in place, but your company will also be in great jeopardy if you get sick or need a long leave of absence without some preparation.

If you wait too long to plan your leave, the transition phase of passing on the business may be strained or your business may suffer losses from your abrupt absence. For one thing, the value of the insurance agency may be lost if there is not a clear decision made about who will take over when you give up the reigns. Gaining new customers is hard, losing them is inevitable if there is no clear leadership in place after you’re gone. A sense of disorder or chaos is enough to make a client look for service elsewhere. Also, if relationships are solely with you, not the company, the relationship may end once you retire.

We’ve got some tips on how to guarantee the survival of your business long after you’re gone.

Choose a Successor or Sell the Business

Maybe you like the idea of having a legacy with your insurance business, but the big question is, do you have someone in mind who can take over what you do? Is this someone who’s worked for and with you and is a key player at your agency? Would they want the responsibility of owning a business and how would you hand it off to them? Would they buy the book of business, work it off? Or, do you have a family member in mind and will they create a stream of retirement income for you after taking over the business? Figuring out how you want to profit is important, not just for you but for the person taking over the business.

The eldest child is not always the best person to look to when choosing a successor to an insurance agency. Forcing an offspring to go into the insurance business could be the kiss of death for your business. Your successor may not even be one of your children. Maybe it’s a niece or nephew who shows an interest in following in your footsteps. If there are multiple people showing interest in taking over, you may cause an upset by picking one over another. Remember that joint ownership is not unheard of but neither are personality clashes when family members work together. And most importantly, make sure that a person is certified to sell the lines of insurance you offer otherwise, you will have an interruption in cash flow and may lose a client for treating their policy irresponsibly.

Most importantly, whomever you choose as your successor(s) needs to be a business owner with a keen ability to look beyond the work they are doing to see the bigger picture at all times. If that description makes a certain person comes to mind, you may have found the right successor! Train your successor by buying leads and live transfer calls. Tackling new business and closing sales are vital functions of the business this person will have to do.

Having a Clean Book of Business in Place

Are you still organizing things the old-fashioned way? Do you have paper files of your clients? Your best bet is to go digital with everything, not just to stay current but also as a means of creating organized files with extensive notes on each client. As you convert your files to digital you can jot down notes on everything you know about each client, invaluable information for when your successor takes over. You want your clients to feel no shift at all as they pass hands. Familiarizing your successor with details about the client will help. Anything you may know about these people -- how many grand kids they have or details about a business they own -- will not only help create a connection, but it will also paint a better picture of that person’s financial situation and needs.

Is Your Business Sustainable?

Are you selling car insurance and then never revisiting the client except during renewal time? If this has been your business model and it’s worked for you, that’s surprising. Customer service is where every agency has its edge or a lack thereof. Insurance rates don’t vary much so clients are often doing business with you because they are getting good service and feel taken care of. Lower rates certainly don’t hurt but it’s often the personal touch and consideration that establishes a solid foundation.

When asked if your business is sustainable, you need to look at the foundation of the relationships you’ve formed. If your relationships feel flimsy, it may be time to revisit your book of business with a fresh approach. Have you taken care to meet as many of your clients’ needs as possible? If you haven’t tried to take care of their renters or home insurance policies, it’s a good time to start now. If you’re a one-man show, this is where your successor comes in, to comb through all your existing clients to tell them about your multi-policy discount offers. Never settle at just auto insurance. It’s likely that your client owns a business or has a home. Most clients aren’t even aware that they are able to change their homeowners insurance -- and save, very often -- because they wrongly assume that their mortgage and insurance are interwoven. They aren’t, not even when they are bundled in one bill. It’s your job to explain all of this to all your clients who own a home. They are probably paying too much for their coverage and you can offer them the same quality product at a lower price.

Your client’s friends and family members are vital connections too. Start a rewards program and have your successor contact all your clients about it. The best time to kick this off is while you’re still working. You’ll need to train your successor, and this is a smart way to do it. This is also a great way to begin introducing the next point person while growing your book of business.

In general, the more indispensable you make yourself as an insurance agent, the more likely you’ll keep the business you have well into retirement and beyond.

Do You Have a Guide Book on Best Practices or a Tasks and Procedures Handbook?

You may know exactly what everyone at your company does but chances are that you’re not aware of half of it! Before you pass along your business, you should create a document of what everyone does in great detail. You may have a one-person show, with you juggling many hats. That’s fine as long as you can document everything you do in the course of a day, a week, each month, and every quarter. There are probably important annual benchmarks you go by too. Putting all this information down in easy-to-follow bullet points will be invaluable to your successor(s).

They say it takes about three years for someone to completely take over a business with a full understanding of how everything comes together. You may not have that much to spend immersing your successor but ideally, you’re around while this person is earning his/her stripes. You’ll want to copy this person on important emails, even if it’s just to have him/her get a taste of your tone and temperament.

It’s best that you make your most guarded secrets of success public, at least to your successor. It all really depends on how close you keep the business after you retire from it. Chances are that if you’re passing it onto family, it’ll matter even more that you spill the beans on how to make it.

The Gradual Surrender

You’ll want to take time when passing the torch. Ideally, you’ll spend a few months making the shift as smooth as possible. The time spent should not be limited to just showing the successor the ropes but when possible, make conference-call introductions so people don’t feel like they are doing business with a stranger.

An abrupt departure is never advised if it’s possible to avoid it. You’ll want your clients to know you’re still there while they’re getting serviced by your successor the first time.

Just make sure your successor has all the relevant licenses well ahead of time or else you'll lose all your business.